We studied a subarctic lake in an area of sporadic permafrost in order to assess the quantitative importance of lake processes for the catchment carbon balance. Estimates of net ecosystem production and stable carbon-isotope composition of dissolved organic carbon (DOC) in the lake water suggest substantial input and respiration of terrestrial organic carbon in the lake. Total export of terrestrial carbon amounted to 9.5 g C m^-2yr ^-1 of which about half was mineralized in the lake and released as CO₂ and CH₄ to the atmosphere. The lateral carbon export and die return flux of carbon to the atmosphere from the lake was equivalent to 20% and 10%, respectively, of the terrestrial net uptake of carbon. The terrestrial NEE is biased towards the wet part of the catchment where the sink strength is highest, implying that the importance of carbon losses via aquatic systems is even higher than the budget calculation demonstrate. The results show that lakes are important sources of catchment carbon emission, potentially increasing the positive feedback from permafrost melting on global warming.